The Wanganui Chronicle TUESDAY, JUNE 23, 1931. PRESIDENT HOOVER’S PROPOSAL

Wanganui Chronicle, Volume 74, Issue 146, 23 June 1931, Page 6

The Wanganui Chronicle TUESDAY, JUNE 23, 1931. PRESIDENT HOOVER’S PROPOSAL

PRESIDENT HOOVER’S proposal that inter-'loverimicutal war debt payments should be suspended lor one year is evidently the outcome of the deliberations which have been proceeding for some time. The existence of these negotiations has been indicated to the public by the reports that Dr. Schachjt, the former Beisch Bank chairman, had gone to America, that Mr Montague Norman had returned to London from a visit to the United States, that Dr. Curtins and Dr. Bruening had paid an informal visit to London, followed by the announcement that Mr Mellon, Secretary of the United States Treasury, had also visited that city. All of this movement was not meaningless—it portended some effort at agreement somewhere—and as the ills that now trouble the world are financial, and Germany provides the financial vacuum, the business under way was not difficult to guess at. The reparations payments made by Germany are practically wholly absorbed by the recipients’ annual payments to the United States. Obviously, the European countries are unable to pay the United States of America unless they themselves receive the reparations payments from Germany. Germany’s 63 millions of population, however, cannot continue to pay reparations and also be consumers of the world’s produce. The taking of this 63 millions, to a large extent, out of the market, naturally has a tendency to reduce not only consumption, but competition also. This sagging effect of German buying has made the present depression more acute than it would otherwise have been. The greater the depression in Germany the more devastating will be Germany’s influence on the level of prices generally. President Hoover's proposal for a year’s financial iioliday will, therefore, confer no direct benefit upon Great Britain nor upon France, but it will confer a direct benefit upon Germany. Indirectly, of course, the whole world will benefit, because prices are now subnormal, and consequently primary producers are unable to pay their fixed charges and make much profit. An uplift of prices will bring the primary producing countries into better condition because they are, generally speaking, debtor countries, and require the large income which a higher range of prices will provide to pay their interest bills. Australia and New Zealand provide typical instances of debtor primary producing countries. The Wanganui district is likely to be materially benefited by the adoption of President Hoover's proposal, because Wanganui always witnesses a strong bench of German buyers at each and every wool sale. The temporary easing of Germany’s financial obligations will, therefore, enable the German people to become larger buyers pf wool, both for home consumption and for re-export as finished articles. The same process will, of course, operate in other markets besides wool, with the result that there will be an added factor operating to increase consumption and to uplift price levels. The magnitude of this added factor ean be gauged by the fact that in the year 1929 the United States Treasury received approximately £40,000,000 on account of foreign Government indebtedness to the United States. The non-payment of this huge sum to the United States will not diminish America’s spending power, because she has a plethora of money in that vast country, ■whereas in Germany the people would not use the money as gambling counters on Wall Street, but to buy the necessaries of life and industry. In America the money would not help industrially, whereas in Europe it would. ft is lor this reason that President Hoover’s proposal is a good one.